Insight and Commentary on Business Legal Issues

Attorney’s Fees

It’s a question that my savvy litigation clients know to ask, before filing suit. No one wants to go through the time and expense of a lawsuit, only to find, after winning the case, that they’ve spent more money on legal fees than they were awarded from the other side.

A good rule of thumb (with some procedural exceptions) is that the prevailing party in a lawsuit may be awarded fees only if a claim for fees is expressly provided in a contract or in a statute which is at issue in the lawsuit. So, prevailing parties in negligence suits, for example, aren’t typically entitled to fees.

Keep in mind, however, that since only “reasonable” fees will be awarded, and the amount to be awarded is largely in the judge’s discretion, even if you win, you will rarely be awarded 100% of the money you spend on the litigation, and an award of fees is, of course, only as good as your opponent’s ability to pay.

One way to protect yourself, is to consult with counsel, before entering into any contract, regarding the pros and cons of including an attorneys’ fees provision.

Alternative billing arrangements are nothing new for lawyers. With the ever increasing cost of doing business, companies have to think about the bottom line and what makes sense when it comes to hiring and using law firms and lawyers.

While the traditional billable hour model may make sense for some clients, not all clients can afford to do business entirely under that model. And so, the push away from the billable hour model is occurring and the move for some is toward the alternative fee arrangement because the bottom line depends on it.

For some companies this means hiring more attorneys or assigning more work to their own company lawyers. For others it means flat fee arrangements or contingency fee agreements but usually some form of billing other than the billable hour model.

Either way, the message is simple: legal work needs to be cost effective for both the lawyer/law firm and the client. Undoubtedly, the future of the billable hour is becoming less certain and staying competitive in the legal marketplace will inevitably have to include more alternative billing arrangements.